Creating a monthly average budgeting plan is a fairly simple process. Begin adding all of your necessary expenses. Take that total and divide it by your total income that you bring home. The percentage you get is the percentage that you will need to take out of every dollar that comes into your home in order to survive and pay your bills. With this in mind let us dive into the process of budgeting.
1. First thing is first, you will need a checking and two savings accounts. However, if there is a charge for the second savings account you can get by on one but you will just have to do a little more tracking.
2. If possible have your paycheck automatically deposited into your checking account this is much more convenient, saving you time and money.
3. Next, deposit the Investment and Long Term Play Accounts into your saving account(s). Remember the total amount that will be deposited is 20% of your paycheck before taxes. If you can get two savings accounts then have the bank to automatically withdraw your Investment Account into one savings account and your Long Term Play Account into the other savings account. If you can only open one savings account without a monthly maintenance fee then add the two accounts together and have that dollar amount automatically withdrawn from your checking when your paycheck clears. I personally have used ingdirect for awhile now and have found them to be the most convenient.
4. Your Play Account will be withdrawn from your checking in the form of cash. So the amount of cash that will be withdrawn is 10% of your paycheck before taxes. This will be the only cash that you carry so when the cash is gone your play account is broke. By carrying cash you relieve yourself from having to track and remember all of the money that you spent to have fun, which makes the process even more fun. Keep in mind that this account must be spent every month and you cannot add to this account by borrowing from your next paycheck. In other words when your cash runs out, your play time is over.
5. Daily Living and Tithe Accounts make up the total remaining in your checking account. At the very next available church service pay your tithes. I prefer to do this by writing a check so I do not have to mix this money with my play money and so I can check for accuracy at the end of the year. However, if you are not a check person withdraw the cash when you withdraw your play money but just be sure not to spend that which is intended for giving.
6. The remaining balance in your checking account after you have paid your Tithe is the amount that you have to live on until your next paycheck. This amount should equal that which you have budgeted for your Daily Living Account. Now just manage your account carefully and be disciplined not to overdraft or to borrow from the other accounts.
Most of my expenses are in the beginning of the month and I get paid every two weeks. Can I use my first check for my Living Expenses Account and then use my next check to make up the difference between my other accounts?
No, you must learn balance in every area with every paycheck. What you are asking is, “Can I borrow from my other accounts on this paycheck and then I will borrow from my Daily Living Account on the next paycheck?” Think back to when you went on a diet. The first time you took a bite of that chocolate pie was the hardest to overcome. The war within you was intense. However, when the second opportunity for pie came around you thought to yourself, what diet? The same is true with budgeting. If you attempt to break the rules once there will be a great war within you. The second time…what budget?
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